Litigation Release No. 21832 / January 31, 2011

SEC CHARGES MAXWELL TECHNOLOGIES INC. FOR BRIBERY SCHEME IN CHINA — MAXWELL TO PAY OVER $6.3 MILLION IN DISGORGEMENT AND INTEREST

The Securities and Exchange Commission announced today that it filed a settled civil action against Maxwell Technologies Inc. (Maxwell) in the U.S. District Court for the District of Columbia, charging the company with violations of the Foreign Corrupt Practices Act (FCPA) for repeatedly paying bribes to government officials in China to obtain business from several Chinese state-owned entities.

The SEC alleges that a Maxwell subsidiary paid over $2.5 million in bribes from 2002 through May 2009 for contracts that generated more than $15 million in revenues for Maxwell, a Delaware corporation headquartered in San Diego that manufactures energy storage and power delivery products. Maxwell has agreed to pay more than $6.3 million to settle the SEC's charges.

The complaint alleges that from 2002 through May 2009, Maxwell, through its wholly-owned Swiss subsidiary, Maxwell Technologies SA (Maxwell SA), paid over $2.5 million in bribes to officials at several Chinese state-owned entities through a third-party sales agent. The bribes, which were classified in invoices as either "Extra Amount" or "Special Arrangement" fees, were made to improperly influence decisions by foreign officials to assist Maxwell in obtaining and retaining sales contracts for high voltage capacitors produced by Maxwell SA. According to the complaint, a Maxwell SA executive approved sales contracts with the Chinese state-owned entities knowing that the purchase orders were inflated by 20% with the intention that the 20% be paid as bribes.

According to the complaint, the illicit payments were made with the knowledge and tacit approval of certain former Maxwell officials. For example, the complaint alleges that former management at Maxwell knew of the bribery scheme in late 2002, when an employee indicated that a payment made in connection with a sale in China appeared to be "a kick-back, pay-off, bribe, whatever you want to call it, . . . . in violation of US trade laws." A U.S.-based Maxwell executive replied that "this is a well know[n] issue" and he warned '[n]o more emails please."

The SEC alleges that Maxwell failed to devise and maintain an effective system of internal controls and improperly recorded the bribes on its books. As a result of this bribery scheme, Maxwell SA was awarded contracts that generated over $15 million in revenues and $5.6 million in profits for Maxwell. These sales and profits helped Maxwell offset losses that it incurred to develop new products now expected to become Maxwell's future source of revenue growth. Maxwell accounted for the bribe payments as sales commission expenses in its financials. Maxwell made corrections in its Form 10-Q filing for the quarter ended March 31, 2009 to reclassify the kickbacks as a reduction in revenue.

Without admitting or denying the allegations in the SEC's complaint, Maxwell consented to the entry of a final judgment that permanently enjoins the company from future violations of Sections 30A, 13(a), 13(b)(2)(A), and 13(b)(2)(B) of the Securities Exchange Act of 1934, orders the company to pay $5,654,576 in disgorgement, and $696,314 in prejudgment interest to be paid in two installments over one year. The order also requires the company to comply with certain undertakings regarding its FCPA compliance program. Maxwell cooperated in the investigation. In a related criminal proceeding, Maxwell has reached a settlement with the United States Department of Justice in which Maxwell has agreed to pay an $8 million criminal penalty in three installments over approximately two years.

The Commission acknowledges the assistance of the Department of Justice's Criminal Division — Fraud Section, in its investigation, which is continuing.